Broadside:
Springtime In the Rockies
from the April 16, 2001 issue of Broadband Week
Maybe it was the snowstorm warning that accompanied the opening of last week's DSLcon, maybe it was the pocket flask that accompanied the press materials given to reporters and analysts attending the show. Neither one inspired the feeling that the competitive DSL business will be leaving the broadband equivalent of Winter any time soon.
It didn't help that days before the Denver confab, hometown DLEC Rhythms NetConnections disclosed it was looking for a buyer and losing its CEO, the heretofore-lionized Catherine Hapka.
There are myriad reasons companies such as Rhythms are failing, although it's hard to see past the repeated touting of now-discredited business strategies that accompanied their rise. "We've got far more demand than supply, so we are continuing to move down the learning curve and increase the number of lines installed," Hapka told Broadband Week last September. "Being almost too successful--with customer demand so high it's hard to keep up--is something I may not see again in my lifetime."
She may not want to see it, given how other industry players now view the ability of DSL-oriented service providers to survive as standalone entities, demand or no demand.
An impromptu audience poll during one DSLcon panel found 49 percent believe that provisioning--the ability to meet all that demand noted by Hapka--is the biggest challenge facing the industry. Another 36 percent pointed to the current DSL business model as the top issue, compared with only 6 percent who listed competition from other technologies such as cable modems.
The message from an admittedly small sample seems to be that for all the faith in DSL as a competitive technology, it's a product that can't stand on its own. Even though subscriber growth is expected to continue accelerating for a number of major service providers, and even though DSLcon featured a variety of vendor advancements in areas such as provisioning, range extension and revenue generating services such as voice and video, the product is viewed, even in this wide-open market for broadband access services, as a black hole.
"I don't think anybody's really making money at it, not even the ILECs," said Gartner Group's Kathy Hackler.
DSL industry players who think voice and widespread line sharing will be the magic bullets that bring them profitability better think again. Rhythms over the past couple of years touted both its provisioning of voice over DSL and its growth in shared lines; now the company's auditors question its ability to remain a going concern.
Furthermore, analysts at DSLcon generally indicated voice will be only a niche product until sometime next year anyway, far too late to help troubled service providers win customers and cash.
Instead, their immediate future is consolidation, either by merger or acquisition from bankruptcy. The real battle for DSL supremacy instead will build between the ILECs and IXCs such as Sprint and AT&T that continue developing their own deployment plans and likely will be the first to make money from the technology.
Until then, where's that flask?
Afterthought: Speaking of Rhythms, was anyone really surprised at the announcement that Catherine Hapka is leaving once she collects her May 1 retention bonus? Hapka several weeks ago bagged her months-old commitment to deliver a keynote at DSLcon, a venue representing the opportunity to send a positive message to a friendly audience.
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